MALAWI:
Back in favour with IMF, donors
JOHANNESBURG, 22 October (IRIN) - Malawi's return to good
grace with
the
International Monetary Fund will unfasten the wallets of important
donor
nations, IRIN was told on Wednesday.
A decision by the IMF executive board to approve a US $9.2 million
loan
disbursement, plus an additional $6.6 million of what it terms as
"interim
assistance" to Malawi, will unlock previously withheld donor funding.
The IMF had barred budget support for Malawi since 2001 as a result of
government overspending. Major Western governments had also
demanded
greater transparency and frozen their funding. Up to 80 percent of
Malawi's development budget is provided by donors.
A European Union spokesman in Lilongwe, Charles Undulu, told IRIN
on
Wednesday the IMF's decision to approve disbursements, following an
appraisal of Malawi's recent fiscal track record, had given "us the
green
light" to follow suit.
"We were withholding about Euro 15 million (about US $17.4 million) of
funding meant for the transport and health sectors. If things had been
on
track, it would have been released two years ago, but as you know, all
the
donors were waiting for recommendations from the IMF," Undulu said.
The IMF has now completed its review of Malawi's economic
performance
under a Poverty Reduction and Growth Facility (PRGF) arrangement
and
approved, in principle, the disbursement of about US $9.2 million.
"The IMF board's decision will become effective upon a further
decision,
following the World Bank's executive board review of Malawi's Poverty
Reduction Strategy Paper [PRSP] Progress Report, scheduled for 23
October
2003. The [IMF] executive board also agreed to the authorities' request
to
extend the arrangement through [to] 20 December 2004, and to resume
interim assistance under the Heavily Indebted Poor Countries (HIPC)
Initiative by approving the release of an amount equivalent to [special
drawing rights] SDR 4.628 million (about US $6.6 million) to help
Malawi
meet its debt service payments on its existing debt to the IMF," the
Fund
said in a statement.
The PRGF is the IMF's most concessional facility for low-income
countries.
PRGF-supported programmes are based on country-owned poverty
reduction
strategies, adopted in a participatory process involving civil society
and
development partners, and articulated in a Poverty Reduction Strategy
Paper (PRSP). "This is intended to ensure that PRGF-supported
programmes
are consistent with a comprehensive framework for macroeconomic,
structural and social policies, to foster growth and reduce poverty,"
the
IMF said.
PRGF loans carry an annual interest rate of 0.5 percent and are
repayable
over 10 years, with a five-and-a-half year grace period.
The favourable IMF review has paved the way for major EU donor
countries -
the United Kingdom, Norway and Sweden - to release funding support
for
Malawi.
EU to support food security
JOHANNESBURG, 23 October (IRIN) - The European Union (EU) is to
commit
?45 million (about US $17.7 million) to strengthen food security in
Malawi.
Malawi recently emerged from a national food shortage, which at its
height saw millions of people depending on food aid to stave off hunger.
EU spokesman Charles Undulu told IRIN that "during the last two or
three years Malawi has not been able to achieve food security, partly due
to the lack of a proper food security policy".
"With the drafting of a new policy, we hope that within the next three
to four years the country will be food secure," Undulu said.
The EU head of delegation in Lilongwe, Wiepke van der Goot, told IRIN
the EU sponsored Multi-Annual Food Security Programme was of "enormous
importance" to Malawi.